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United States Supreme Court Rules That Private TCPA Suits Can Originate in Federal Court

United States Supreme Court Rules That Private TCPA Suits Can Originate in Federal Court

United States Supreme Court Rules That Private TCPA Suits Can Originate in Federal Court

January 25, 2012

Businesses today still attract customers the old-fashioned way:
by telephone solicitation. Customer solicitation/retention studies
show that among the most successful methods for businesses to win
and retain customers is by telephone call, which is why
telemarketing remains a major source of new and repeat customer
business in the US. Federal regulators have restricted the use of
certain telemarketing practices to protect consumers from the more
abusive uses of telephone technology: the use of robo or
auto-dialer systems, prerecorded or automated voice messages,
telemarketing calls or text messages ("SMS") to mobile telephones,
and faxes of unsolicited advertisements. The FTC also manages a
National Do-Not-Call Registry, and companies are required to comply
with company-specific do-not-call requests from prospective
customers. Nevertheless, as anyone with a residential wireline
telephone knows, consumer telemarketing remains active in the
US.

The US Supreme Court, in a unanimous January 18, 2012 opinion in
Mims v. Arrow Financial Services, LLC, No. 10-1195,
resolving a major split among the various US Circuit Courts of
Appeal, has definitively ruled that private actions brought by
consumers seeking redress for violations of The Telephone Consumer
Protection Act of 1991 ("TCPA" or "Act"), 47 U.S.C. § 227, may be
brought in federal district court as well as state court. Reversing
the US Court of Appeals for the Eleventh Circuit and a Florida
district court, the Court held that because a federal statute
creates the right of action and federal law, including FCC rules,
"furnishes the substantive rules of decision", therefore the TCPA
claim arises under the laws of the United States for "federal
question" jurisdiction to exist under 28 U.S.C. § 1331. Here, the
TCPA's language was admittedly "state-court oriented". While the
TCPA in various provisions provides a permissive grant of
jurisdiction to state courts, the Court held that this does not
deprive US district courts of federal question jurisdiction over
private TCPA suits. Unless Congress expressly "or by fair
implication" divests federal courts of their federal question
authority to adjudicate a dispute, federal courts may adjudicate
claims under federal law. In fact, federal courts have exclusive
jurisdiction over state-initiated TCPA suits under the TCPA. Stated
another way, though the TCPA provides permissive state-court
jurisdiction over certain TCPA claims, the Court held that nothing
in that statutory language makes state-court jurisdiction
exclusive, "or otherwise purports to oust federal courts of their §
1331 jurisdiction." In other words, this opinion is a warning to
federal legislators that if there is any ambiguity about federal
question jurisdiction over private lawsuits arising under a federal
statute, courts will side in favor of finding federal question
jurisdiction.

This Supreme Court opinion resolves a split among the Circuit
Courts of Appeal in which the 9th, 3rd, 2nd, 5th and 4th Circuits
had held that US district courts lack federal-question jurisdiction
over private TCPA actions, while the 6th and 7th Circuits had held
to the contrary. The likely impact of this decision will be to
encourage the filing of more TCPA claims by plaintiffs in the
federal courts—where the requirements of federal substantive law
may be more effectively identified and enforced—rather than in
state court now that the threat of dismissal for lack of federal
question jurisdiction is no longer present.

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